Crop Liens

2 minutes to read

Emerging in the chaos and economic devastation that followed the Civil War, crop liens were advances of credit to farmers with their future crops as collateral. When small farmers, tenants, and sharecroppers possessed little or no significant real or personal property, the only way they could get loans to purchase seed, mules, and other necessities was to mortgage their crops (and often whatever little property they did possess). When harvested, crops would be used to pay off the loan.

The crop-lien system allowed the decentralized postwar economy to function but imposed significant costs on individuals and on society as a whole. It focused on cotton production even as prices declined toward the turn of the twentieth century. Merchants and landowners advantaged themselves by exploiting dirt-poor farmers, further crippling those at the very bottom of the economic ladder.

Crop liens averaged roughly eighty dollars per year but varied depending on the amount of land to be farmed, the size of the farm family, the number of mules available to the farmer, and the farmer’s reputation. However, the loans did not take the form of cash. Instead, farmers would receive credit at the merchant’s store with which to purchase food, clothing, shoes, household items, feed, fertilizer, and farm implements. To cover interest accrued on the debt, farmers buying on this credit paid significantly more for these items than those paying cash. Interest rates ranged between 25 and 60 percent or more. Defenders of the system argued that these rates were justified based on such factors as the high risks involved in agriculture and high interest rates the merchants paid to their northern suppliers; critics, conversely, charged that merchants extending credit took advantage of their monopolies and of debtors’ poverty. Whatever the reasons for and validity of the high interest rates, they resulted in a situation where both white tenant farmers and black sharecroppers became trapped in a cycle of perpetual debt.

Black sharecroppers in particular found themselves forced to grow cotton in a declining market, increasingly dependent on and regulated by merchants and landlords, and unable to escape the grinding poverty of this economy. In the words of Edward Royce, sharecropping and crop liens ultimately led to a devastating “constriction of possibilities.”

In Mississippi, conflicts between white elite landlords and merchants and poorer whites led to political struggles over crop-lien laws. In 1875 the state gave landlords precedence over crops, preventing sharecroppers from using the crop as collateral. In 1886, with many poor whites losing their farms to banks and merchants, Mississippi rescinded the crop-lien law, ostensibly to protect small farmers, although the laws and the courts generally continued to uphold the rights of creditors.